Why American Workers Without Much Education Are Being Hammered

Protesters participate in a “die in” in front of a McDonald’s restaurant during demonstrations asking for higher wages in Manhattan, April 15, 2015. REUTERS/Lucas Jackson

The last couple of decades have been terrible for American workers without much education. New research calculates just how bad, and offers some evidence as to why that is.

In short, they face a double whammy. Less-educated Americans, especially men, are shifting away from manufacturing and other jobs that once offered higher pay, and a higher share are now working in lower-paying food service, cleaning and groundskeeping jobs. Simultaneously, pay levels are declining in almost all of the fields that employ less-educated workers, so even those who have held onto jobs as manufacturers, operators and laborers are making less than they would have a generation ago.

Perhaps the single most shocking number in a new review of employment and earnings data by researchers at the Hamilton Project, a research group within the Brookings Institution, is this one: The median earnings of working men aged 30 to 45 without a high school diploma fell 20 percent from 1990 to 2013 when adjusted for inflation.

A group of people not earning much to begin with, in other words, has seen earnings plummet to $25,500 in 2013 from $31,900 in 1990 (both numbers are in 2013 dollars). Men with a high school diploma did only a little better, with a 13 percent decline in median earnings over the same span. Women did better than men, but it has been no era of riches for less-educated women either; those without a high school diploma saw a 12 percent decline in median earnings, and those with a high school diploma or some college a 3 percent gain.

The difficulties of American workers, and especially those with low levels of education, have been well documented. What makes the latest analysis, by Melissa S. Kearney, Brad Hershbein and Elisa Jácome, interesting is in some ways its simplicity. They focused on a slice of census data that avoids some of the more contentious dimensions of these debates.

They are using data over a relatively long period, 23 years, that includes three recessions and three recoveries, so the results should be little affected by exactly where we stand within the economic cycle. They focus on people between ages 30 and 45, so the numbers shouldn’t be much affected if people choose to stay in school longer or retire earlier. They focus only on those who worked at least 750 hours during the year, sidestepping the debate over whether millions of Americans who have left the work force are doing so voluntarily or because they don’t think there are good job opportunities available to them.

There are two common stories for why this has been such a hard couple of decades for less-educated American workers.

First, there is the decline of the number of jobs in manufacturing and other industries that once paid less-skilled workers good wages, a result of technology and globalization. Second, there are changing norms around worker pay and the workplace — less union power, for example, a lower minimum wage when adjusted for inflation, and a culture in corporate America of cutting labor costs to the bone.

It would be dangerous to read too much into a relatively simple crunching of census data, but the Hamilton Project numbers offer some evidence for both.

First, there really is a shift away from the sectors where less-educated workers can earn a decent living. In 1990, 40 percent of the prime-age male workers without a high school degree worked as operators and laborers, a number that declined to 34 percent in 2013. Jobs in food service, cleaning and groundskeeping nearly doubled in the same span, to 21 percent from 11 percent. But it wasn’t an even trade: Pay for operators and labors was $25,500 in 2013, compared with $20,400 for the food, cleaning and groundskeeping category.

You’re not imagining it. The jobs that are being created for less-educated workers really do pay less than the ones that are being lost. That suggests that globalization and technological change — the shifts that are making those machine operator jobs fewer and farther between — are a factor in depressed wages.

But the shift in occupational categories, the researchers found, accounts for only about a third of the decline in pay for men without a high school degree and one-sixth of the decline for those with a degree. A bigger effect is downward pressure on pay in jobs held by low-education workers across the board.

So not only did people shift from higher-paying fields to lower-paying ones, but inflation-adjusted pay also fell in all of those jobs. For example, production work — manufacturing, largely — was the highest-paying category for men without a high school diploma in 2013, paying them $28,000. But that sector was both smaller (29 percent of such workers, down from 31 percent) and paid less (down from $33,600) than it did in 1990.

The drop in pay across the board for low-education workers hints more at some of those factors around employers’ bargaining power and practices. Both factors could come into play, though. For example, perhaps a rise in automation and globalization is eliminating manufacturing jobs, and the people who once held those jobs are now competing for work as janitors and food preparers, and the additional supply is helping to depress wages in those fields.

“One thing that’s always bothered me about the political debate is people want to say either it’s globalization and technology, or it’s institutions,” said Ms. Kearney, who is director of the Hamilton Project and a professor at the University of Maryland. “But of course it’s both.”

Clearly things have never looked better for bringing millions of unskilled illegal workers to the USA. Not to mention the effect of them on unskilled workers already living in the USA.